FSUOGM: Gazprom to build up $10.2bn risk fund

Russia’s Gazprom announced on October 19 it would build a reserve fund worth RUB726bn ($10.2bn) by the end of the year to manage potential risks, even while it generates record gas revenues on the back of a surge in prices over recent months.

The deputy chairman of Gazprom’s management committee, Famil Sadygov, said the fund would provide “necessary budget strength and resistance to volatility in the external environment.”

Gazprom has approved its 2021 investment programme at the previously announced level of RUB1.19 trillion, Sadygov said, which includes RUB1.02 trillion of capital expenditure. This figure is based on an average gas price of $269.6 per 1,000 cubic metres, he said.

Gazprom typically uses a conservative gas price to calculate its investment in a given year. Wholesale gas prices have spiked in recent months, reaching almost $2,000 per 1,000 cubic metres at the Dutch TTF hub on October 6. The price growth will have affected some of Gazprom’s long-term contracts, which factor in hub prices.

“Compared with the initial plan, the proceeds from gas sales have increased by almost 30%, which will allow Gazprom to reach an historic record level of revenues in 2021,” Sadygov said.

This comes after Gazprom recently announced it had boosted gas flows to countries outside the former Soviet Union by 13.1% in the year up to mid-October, to almost 152bn cubic metres.

Gazprom also expects its EBITDA to almost double to over $45bn this year, although analysts at Moscow-based Sova Capital said this figure was slightly below their forecast. Based on that, they have lowered their dividend per share estimate from RUB45.6 to RUB39 per share, implying yields of 11% and 12% respectively.

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